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Tourism development, renewable energy, and environmental quality in Asean: New evidence from panel estimators robust to cross-sectional dependence and heterogeneity

Author

Listed:
  • Chen, Jen-Eem
  • Ahmad, Mahyudin
  • Mohd Zulkifli, Shaliza Azreen
  • Tan, Yan-Ling
  • Mustofa, Moh. Solehatul

Abstract

Tourism is widely recognized as a key driver of economic growth and development, yet its dependence on the energy sector has raised concerns regarding its environmental impact. Aiming to elucidate the roles of tourism and renewable energy in shaping the environmental outcomes, this study investigates the nexus between tourism development, renewable energy utilization, and environmental quality across 10 ASEAN countries over a 25-year period from 1995 to 2019 by employing panel estimators robust to heterogeneity and cross-sectional dependence such as Panel Corrected Standard Errors (PCSE), Feasible Generalized Least Squares (FGLS), and Augmented Mean Group (AMG) that are rarely utilized in the ASEAN context. Our findings reveal that tourism activity contributes to CO2 and greenhouse gas emissions, with a 1% increase in tourist arrivals associated with a 0.1 to 0.3% rise in emissions. Moreover, we observe a significant mitigating effect of renewable energy on tourism-induced emissions. Our analysis also lends strong support to the Environmental Kuznets Curve (EKC) hypothesis, indicating a threshold level of GDP per capita of USD 13,000, beyond which the adverse environmental impact of GDP turns positive. The common dynamic process in AMG estimator is found to raise emissions, implying the ASEAN strategic policies on sustainable tourism and energy cooperation may not yet come to fruition given the region’s heavy reliance on non-renewable energy sources to sustain tourism and meet population demands. We conclude with policy implications aimed at fostering sustainable tourism and development in the region.

Suggested Citation

  • Chen, Jen-Eem & Ahmad, Mahyudin & Mohd Zulkifli, Shaliza Azreen & Tan, Yan-Ling & Mustofa, Moh. Solehatul, 2024. "Tourism development, renewable energy, and environmental quality in Asean: New evidence from panel estimators robust to cross-sectional dependence and heterogeneity," MPRA Paper 122212, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:122212
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    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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